Senate passes budget bill without solar excise tax
The Senate’s new budget bill removes the solar excise tax but keeps the 30% residential tax credit ending in 2025. Learn what changed, what stayed, and what it means for homeowners, utility-scale developers, and the future of solar energy in the U.S.
On July 1, the U.S. Senate passed its version of the 2025 budget reconciliation bill, with Vice President JD Vance casting the tie-breaking vote. While the final legislation still poses challenges for the clean energy industry, several significant changes were made—some of which may help utility-scale and residential solar projects push forward in the short term.
What’s Changed in the Final Senate Bill?
The 50% Excise Tax on Chinese Solar Components—Removed
Originally proposed as a major blow to solar developers, the excise tax on solar projects tied to Chinese materials has been stripped from the final version. This is a huge relief to many in the industry, though foreign sourcing rules still remain on the horizon.
Residential Solar Tax Credit (25D) Still Set to Expire
The 30% residential solar tax credit (ITC) is still scheduled to expire at the end of 2025. Homeowners must install systems by December 31 to claim the full credit. (SEIA Overview Here)
Utility-Scale Projects Get a Temporary Lifeline
Projects that begin construction within 12 months of the bill’s enactment and are placed into service within four years can still qualify for the full ITC/PTC (48E/45Y). According to Roth Capital Partners, this could effectively extend the 100% tax credit to mid-2030 for projects that begin construction by mid-2026. Projects that miss that timeline must be placed into service by the end of 2027 or risk losing incentives.
What’s Still Intact (or Repaired)
Residential leasing companies can now receive the 48E commercial ITC
Storage tax credit (48E) remains untouched—still available through 2033
Manufacturing tax credit (45X) is preserved and stackable, allowing wafer-cell-panel manufacturers to receive layered incentives if made at the same facility
What About Foreign Entity Restrictions?
Projects that start construction in 2025 are exempt from the Foreign Entity of Concern (FEOC) rules.
However, starting in 2026, developers can no longer receive “material assistance from a prohibited foreign entity”—a clause that will complicate sourcing and pricing for many U.S.-based solar companies.
Industry Leaders Respond
Abigail Ross Hopper, President and CEO of SEIA, issued a stark warning:
“If this bill becomes law, families will face higher electric bills, factories will shut down, Americans will lose their jobs, and our electric grid will grow weaker.”
“This would destabilize our energy future and strip millions of families of the energy savings, resilience, and independence that solar and storage provide.”
What Comes Next?
The bill now heads back to the House of Representatives, where lawmakers must approve the Senate’s revisions before it moves to the President’s desk.
In the meantime, homeowners and businesses still have a narrow window to take advantage of the current 30% solar tax credit—and that opportunity is closing fast.
Don't Wait Until the Window Closes
If you’re considering solar for your home or business, now is the time to act. The incentives are still available—but this bill makes it clear: they won’t be around for long.
👉 Schedule your solar consultation today and lock in your 2025 installation before it’s too late.